How I bought my 1st property with just R20 000 in my account | Fin24

How I bought my 1st property with just R20 000 in my account

Aug 20 2015 15:57
*Francois Joubert


When I was 23 years old and practically broke, I bought my first investment property - with just R20 000 in my bank account.

After I finished university I realised that I wouldn’t get rich off a salary. I also saw that putting my money into a retirement annuity month after month wouldn’t get me to retire early.

So I searched for options to make money, at low risk and without loads of capital.

I’d make a little money investing in the stock market. But I wanted to invest in something a bit more tangible, that I had more control over.

That’s when I stumbled upon the secret of getting other people to pay for my retirement.

I bought a R365 000 property using other people’s money. I used the cash in my bank account to pay lawyers for transfer fees and leave some reserve to pay my initial shortfall.

Five years later I owe R320 000 on the property. I could fetch around R450 000 for the property today and bank a R110 000 profit after my initial R20 000 investment.

But that’s not the full story of how I’m becoming financially free…

How other people’s money will pay for my early retirement

The moment I bought this investment property the rental income I received from it basically covered the bond and levies. I only had to pay in R350 a month from my own pocket.

But the R3 500 rent I received immediately became income I earned in the bank’s eyes.

This meant I could access another loan.

This time, with a R10 000 deposit I secured a R555 000 apartment from a developer.

No transfer costs, no lawyers' fees, not even a 10% deposit.

Year one I got R5 400 rental income a month, year two R5 600 and year three R6 000. Over the first two years I paid in R4 000 to cover expenses. By year three I had a positive cash flow.

By this time, the developer was selling his last units in the complex for R715 000.

From here on a tenant pays the property for me. I won’t have to pay in a cent going forward and I not only benefit from capital appreciation, I also collect cash every month to put towards my next property.

I’m 27 now. I own five properties. Combined, they’re worth R3.585m. I’ve used the bank’s money to buy all of them.

Over the years I haven’t invested much more than R100 000 of my own money. Yet, even after mortgage debt, my investments are worth R1.4m.

A couple more years and they’ll be paid off. By then I'll own even more properties.

I could easy make enough money to retire earlier than my father.

I don’t need miracles, massive capital growth or a big bank balance. All I need is willing tenants and the bank’s money.

I’m sure you’ve heard rental horror stories, about property investors who lost money. That needn’t be the case.

Sure, I need to be prudent. I can’t overextend myself with debt. But I’m in the position where even a reasonable increase in interest rates wouldn’t hurt my property business.

I’ve picked up a couple of tricks from property managers regarding tenants. In five years I haven’t had a single month’s vacancy on any property I own. I’ve had only one slightly unsavoury tenant – who I got rid of quickly.

I'm constantly asked how I did it.  And, after some persuasion from friends, I sat down and put together a guide on how to use other people's money to build a profitable property business. I've now made this guide publicly available, for free.  Just click here to get your copy.

*Francois Joubert is a property investor and investment strategist for You can read more of his articles here.

property  |  money


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